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33 » VISIT US ONLINE @ DSNEWS.COM LURE OF HOMEOWNERSHIP GROWING IN 2017 e past year saw extremely high demand for homeownership, causing nationwide home prices to rise considerably higher by the end of the year. is surge in demand can be attributed to low mortgage rates, home prices still lingering below 2007 peak evaluations, and rising rent rates at the beginning of 2016. Zillow's 2016 December Market Report offers a figure of $193,800 as the median home value for December, a 0.6 percent increase from the previous month and a 6.8 percent increase from the end of 2015. e figure still falls short of the April 2007 median home price high of $196,600, but the shortage of inventory will likely continue to propel prices higher throughout the beginning of 2017. Total home inventory was down for December by 4.6 percent when compared to the close of 2015. e total amount of homes available for sale throughout the United States was 1.418 million in December, a steep decline from the July 2011 high of 2.349 million. However, there were some regions which experienced considerable increases in inventory: Las Vegas, Nevada, saw a stunning inventory increase of 25.7 percent for the year, while Austin, Texas and Miami, Florida incurred inventory gains of 15.1 and 14.6 percent, respectively. In contrast to the impressive annual increase in home prices for 2016, rent rates did not have any meaningful gains during the last three quarters of 2016. According to the Zillow Rent Index, the national median rent came in at $1,403, which was only 1.5 percent higher than rent rates in 2015. e top three cities where rental rates grew the fastest were Seattle, Washington at 8.4 percent, followed by Portland, Oregon's increase of 6.8 percent, and lastly Sacramento, California at 6.7 percent. Pittsburgh, Houston, and Virginia Beach were three large markets where rent rates actually decreased in the YOY comparison for December. Pittsburgh incurred the largest rate drop in rental rates of -1.9 percent, followed by Houston at -1.5 percent, and finally Virginia Beach with a -1.1 percent decrease in rent. e relatively flat growth in rental rates, Zillow notes, can be attributed to the attractiveness of both home prices and mortgage rates, which swayed many buyers to purchase a home rather than rent an apartment or a multifamily unit. However, as home prices continue to rise in price and mortgage rates likewise increase, individuals may begin to look at renting as the more viable option. "At the end of 2016, home values were up nearly 7 percent from the year before, while rents were essentially the same as they had been a year earlier," stated Zillow Chief Economist Svenja Gudell. "As older millennials look to become homeowners, short inventory and rapidly rising home values will remain a challenge in 2017. However, the rent slowdown brings good news for renters, easing the pressure to escape the rental market and turn to homeownership." RBS SETS ASIDE BILLIONS FOR SETTLEMENTS e Royal Bank of Scotland (RBS) announced on January 26 that it plans to set aside an additional $3.8 billion in preparation to settle claims in the United States that it sold toxic mortgage-backed securities (MBS) leading up to the 2008 financial crisis. e bank made the provision public well ahead of its full year 2016 results announcement set for February 24. e announcement adds more fuel to the fire of speculation that the bank will soon reach a settlement regarding the claims against it. e British-based bank was one of 18 financial institutions sued by the by the Federal Housing Finance Agency (FHFA) in 2011 to recoup U.S. taxpayer costs following the government's $187.5 billion bailout of Fannie Mae and Freddie Mac in 2008. RBS has set aside a total of $8.3 billion in litigation "provisions" to date. e suit against RBS is the last case not resolved through trial or settlement: 16 settled for a combined total of about $17 billion, while Nomura Holdings went to trial in March 2016. Nomura was found liable for deceiving GSEs in the sale of $2 billion of mortgage- backed securities, and was ordered to pay $839 in penalties. Nomura has since appealed the verdict. "Putting our legacy litigation issues behind us, including those relating to RMBS, remains a key part of our strategy," said Ross McEwan, CEO of the UK-based bank. "It is our priority to seek the best outcome for our shareholders, customers and employees." e provision will reduce RBS's Q 3 2016 CET 1 capital ratio to 13.6 percent. Business Insider reports that the new provision makes it unlikely RBS will post a profit for 2016, the ninth straight year the bank has failed to do so. "RBS continues to cooperate with the U.S. Department of Justice in its civil and criminal investigations of RMBS matters, and RBS considers it appropriate to take this provision now in relation to those investigations as well as other RMBS litigation matters," the bank said in its statement issued ursday. "e duration and outcome of these investigations and other RMBS litigation matters remain uncertain, including in respect of whether settlements for all or any of such matters may be reached." e statement went on to say "further substantial additional provisions and costs may be recognized" in the future and that other adverse consequences may occur. e bank previously reached a final settlement with the National Credit Union Administration Board in September 2016 for $1.1 billion due to other MBS related sales. RBS previously agreed to pay $99.5 million to settle a separate FHFA suit claiming that the bank sold more than $2 billion worth of faulty MBS to Fannie Mae and Freddie Mac between 2005 and 2007.

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